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We're collateral damage from political parties' arms race

Voters should consider the following questions when assessing whether the major parties have betrayed them on political funding.

Do you believe all wisdom lies in the major parties? Are they doing the best job possible? Should vested interests have to disclose when they seek to perpetuate entrenched political power?

To that end, the Herald believes the political donations bill that Labor plans to put to the Parliament on Thursday reflects a self-serving deal between the parties that undermines the principle that democracy should be a contest of ideas, not power. Labor elder statesman John Faulkner is right to be ashamed of his party for watering down the reforms in its 2010 donations bill and its 2011 parliamentary committee report.

The new bill does little to expose the donations of individuals and nothing to check the large sums directed into the major parties from unions, big business or special-interest groups funded by wealthy campaigners. The so-called "arms race" in political campaign spending deters talented people from standing for Parliament. The new deal makes the task even harder.

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Labor's bill hands the registered parties and independents tens of millions of dollars for extra administrative work without any proof that amount is required nor anything to ensure it won't end up funding apparatchiks and advertising, let alone rewarding financial ineptitude.

Labor, Liberal, the Nationals and Greens need the cash. Yet taxpayers are being told the parties deserve more untied handouts when they already receive millions in private donations.

Worse, the proposal entrenches incumbency by backdating the extra funds to April 1 based on 2010 election results. Worse still, the bill hands $300,000 a year to parties with at least five senators or MHRs - not independents or smaller parties with good ideas. This "compliance" funding aims to help parties cope with six-monthly rather than yearly reporting of donations. That is one extra piece of red tape each year. Small business gets nothing for coping with hundreds.

A Labor-Coalition compromise allowed all parties to keep secret the names of donors who give up to $5000 rather than the present $12,100. Labor had wanted a $1000 cut-off in the 2010 bill. The Coalition objected, fearing "the potential for intimidation and harassment" of donors. Some independents fear the same. But the goal is surely to maximise transparency so voters can see who is pushing what agendas in national discourse.

The new bill also allows donors 90 days after the end of the half-year period to disclose their payment, rather than 56 days in the original bill. No mention of the 2011 report's push for contemporaneous disclosure.

Granted, the new proposal forces donors to declare within 28 days any single donation of over $100,000. Still, the 2011 committee report recommended just 14 days to limit the chances of donors evading disclosure through myriad smaller daily donations.

Labor's new bill also allows anonymous donations of up to $1000 at fund-raising events rather than the $50 specified before. Besides watering down previous reform proposals, the new deal leaves large gaps. It does not cap political donations. One individual or union or business can still throw millions at a campaign and drown out other voices.

It falls short on preventing donation splitting, when donors give smaller amounts to state branches to evade lump sum disclosure limits. The 2010 bill and 2011 parliamentary report tackled the problem.

It fails to redress the advantage Labor enjoys through indirect access to tax-deductible union membership fees. Other parties and independents rely on non-deductible political donations. And the Coalition is right to cry hypocrisy when Labor attacks corporate influence but protects its institutionalised union influence.

Above all, the new bill lacks forced disclosure of donations to third parties. Unions donate to groups such as GetUp. Industry does likewise to non-party bodies. NSW law goes some way to doing this, the 2011 parliamentary report recommended it and so did Labor's 2010 bill.

On all counts, voters are entitled to decry this bill as self-serving and anti-democratic.